According to Investopedia, Amazon’s net income more than tripled last year from $3 billion in 2017 to $10.1 billion in 2018. Statistics like this make Amazon seem virtually unstoppable.
Amazon has become the juggernaut that it is by intuiting customer preferences and trends. They leave us wondering from year to year, “What will they innovate next?” and “Can this kind of growth continue?” We asked experts in the industry to share their predictions for Amazon’s strategies and growth in 2020. Here’s what they said:
US digital advertising spend is already well over $100 billion, and Amazon is slowly creeping its way to the top. While the duopoly of Google (Alphabet) and Facebook still take the cake, the next year will see a significant spike in Amazon’s ad revenue as fewer marketers will be spending their money on Google Ads.
While Google makes up over 35% of the ad revenue, with Facebook coming in second at just over 20%, Amazon may only be hovering around 8%. However, there’s reason to believe that Amazon will skyrocket to closer to 13% to 15% by the end of 2020. At the end of the day, Amazon ads are going to grow for the simple fact that they offer a preferable consumer intent for their visitors. In other words, people are in a buying mindset when they visit Amazon. On the other hand, someone using Facebook or Google may just be reading and have no intent to make a purchase.
I think we’ll see Amazon make some major developments in their logistics and last-mile delivery options in 2020. These will be driven by a “smarter” Amazon delivery driver than we see today. But that’s both types of smart: better driver presentation and delivery standards as well as better use of digital devices and AI-optimized deliveries to ensure maximum delivery rates at minimum cost. In turn, we’re about to see a major disruption in the delivery courier market, which Amazon will be leading.
Throughout 2020, I expect Amazon to start creating and enforcing more regulations on what is allowed to be sold on their platform and who can sell. Currently, the majority of sellers are permitted to sell on Amazon as long as they can prove that they are a company and have all the required tax information. Amazon does have policies in place for different types of products that are allowed to be sold on Amazon, which helps to prevent banned substances or illegal products from being listed. But a recent article posted by the Wall Street Journal shows that there are over 4,000 products on Amazon that are either banned, unsafe, or deceptively labeled. Members of Congress are starting to take a look and want answers. If this issue does escalate, Amazon will be forced to act.
Amazon is a customer-driven company, so this information coming to light is going to drive Amazon to make changes, even if Congress doesn’t intercede. 2020 is probably going to be a hard year for sellers currently on or wanting to join Seller Central. Each seller will have to keep up with new policy changes, make sure their products comply, and supply proof. Even if the seller has a legitimate product and has done nothing wrong.
Amazon is slowly becoming more and more crowded with not only more competition, but significantly less expensive products. This is causing the quality of the products to decrease and the trustworthiness of Amazon to fall as well. This is going to give other marketplaces more room to [compete], but it also means that companies need to focus on their brand building. It will be harder and harder to utilize the existing traffic on Amazon. Companies will need to build their brands off Amazon and not have Amazon be their sole selling spot.
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